Dive Brief:

• Stephen Mason is set to replace Jon Giacomin as CEO of Cardinal Health’s medical segment next month.

• The leadership change follows a tough period for Cardinal’s medical segment, with the company lowering its profit outlook in May blaming a “difficult" third quarter.

• Mason has spent the past few years heading up Cardinal’s at-home solutions business, a rare bright spot in the medical segment that has posted multiple quarters of double-digit growth.

Dive Insight:

Giacomin has spent more than a decade at Cardinal and rose to the position of medical segment CEO in February 2018. Cardinal tasked Giacomin with addressing the operational and supply chain issues created by its $1.9 billion acquisition of Cordis from Johnson & Johnson. Shortly after Giacomin took the job, problems at Cordis triggered a 19% drop in Cardinal’s stock, sinking it to its lowest level in five years. 

Cardinal’s efforts to resolve the problems advanced under Giacomin’s leadership, with Cardinal CEO Michael Kaufmann highlighting "improving service levels and fill rates, lower back orders and increased cost discipline" in May.

But the broader medical segment has continued to face problems. Kaufmann said management was "disappointed" with the performance of the segment in the third quarter and expressed a desire for initiatives including cost cutting to advance faster. With supply chain cost integration work leading to back-orders and higher expenses, medical segment profits fell 22% in the quarter.

Responsibility for turning the segment around will fall on Mason, who is set to replace Giacomin in the middle of August. Giacomin is leaving to become CEO of an as-yet-undisclosed private company.

In picking Mason to replace Giacomin, Cardinal is handing increased responsibility to someone who has thrived within the struggling medical segment. The at-home solutions unit that Mason heads up posted another quarter of double-digit growth in the third quarter. Cardinal management, having called out the slow pace of overhead cuts at the medical segment, highlighted the "extremely effective" cost management of Mason’s unit.

Mason is set to take charge of the medical segment shortly after Cardinal posts its full-year results next month. Cardinal expects the medical segment to record a low to mid single digit decline in profit for the year.